Forex100 Academy Educational Series – (3 July 2019)
You must know these SECRETs before you start Trading (Part 1 of 3)
In every journey or adventure that you plan to embark on, I believe that you should at least try to understand what you are in for. Hope you agree with me on this statement
- A business you want to start – got to have a business plan, product, location etc
- A holiday you are going – got to have your itinerary ready
- A 18hole golf game – some golf lessons before that
So how about when you embark on your Forex trading journey? It is critical that you know what you are jumping into. I would like to share this SECRETS that every trader should know before they start trading.
Course Director – Harmonic Trader
The 3Ms of Forex Trading
The secret that I am revealing here is the 3Ms of trading. With this secret, you will be able to understand more about yourself and how you should approach trading. Occasionally remind yourself of these 3Ms so that you stay on the right path as your trade.
In our training and teaching sessions, it is always about you. The teachings are to help benefit you and your trading. Keep an open mind as you discover these 3Ms.
See how you can relate these 3Ms to yourself, your personality and temperament to decide how you are going to approach your trading journey.
The 1st of the 3Ms – MONEY
Money makes the world go-round.
Let’s be realistic. We are looking at currency trading and you will definitely need to place funds in a trading account to start trading.
I am not talking about the amount of money you need to have before you can start trading. Most brokers will allow you to start trading with a couple of hundreds of dollars only. Hence the entry barrier is very low.
How much returns should I be expecting?
When someone asks me this question, my immediate response will be to educate them that their first initial goals will be “Not to lose money”. The main goal will be to trade the right way and the profits will naturally flow in.
Set the correct expectations. By first learning to avoid the pitfalls in Trading, you are already saving yourself some money. Then adapt the best practices in Trading, you are on your way to make your profits.
Ok, seriously….. how much returns should I be expecting?
When asked this question, many participants did say $3000 – $5000 in the first month after I learn and start to trade. I would like to point out that the median pay of graduates in Singapore is about $3500. A typical graduate program will take 3-4 years to complete.
Hence you have to ask yourself, just by learning to trade, it is realistic to immediately earn a graduate’s pay? Do manage your expectations yah.
Source of the MONEY
In your Forex Trading journey, it would be advisable that you are risking the amount of money that you can afford to lose. You will naturally have a more stable mindset when you start off this way.
Imagine the opposite scenario where you are constantly worried when your trades are losing. Your analysis will be affected when you don’t have a calm and sound mindset.
I have personally turned away many potential students when they come to me for help and they have the intention to borrow money to start trading in the Forex Market. I know that there is a high chance they will fail because of the tremendous stress they have put themselves in by borrowing money to trade.
Placing a Stop Loss
I have personally seen people blowing their trading accounts because of bad money management. They trade without placing a stop loss on their trades. So when the trade against them, it went all the way down to zero.
“Stop Loss” is where you cut your losses when the trade is not going your way.
Food for thoughts: If you limit your risk to only 1% per trade, you would have to lose 100 consecutive trades for you to bust your account.
Avoid Short Term Targets
Avoid setting short term targets. For example: “I want to make $100 per day”. Let’s play out a scenario below (with a target returns of $100 per day):
Monday: Target $100 for the day but manage to breakeven only
Tuesday: Target is now $200 for the day and say you lose $100 on Tuesday
Wednesday: The aim will be to make $400 for the day.
$400 = $100 (Mon) + $100 (Tues) + $100 (cover Tues loss) + $100 (Wed)
If you get the drift. By Friday, probably, your required targets might have ballooned to such a huge number. This will definitely give unnecessary stress for you to perform and you will end up taking unnecessary trades and risks just to achieve the targets that you have set for yourself.
Hence, it is better to have a longer-term target. Instead of $100 per day, you could be better off aiming for say, 2% returns per month. Or say, 5% per quarter. It will be less stressful on your daily trades.
Stay tuned for the 2nd part of the 3Ms
Thank you for reading
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